THERE is a “reasonable” chance that Britain could follow the USA into outright recession, it is claimed.
Roger Bootle, economic adviser to business advisory firm Deloitte, said UK output had weakened to just 1% compared with 3% a year ago – suggesting there was “pain ahead” for the profitability of business.
Mr Bootle said profits in the non-financial sector could fall by more than 10% by the end of 2009 in response to the double whammy of slower growth and rising costs.
Last year was a bumper year for profits – with gross operating surplus rising by more than 7% in the non-financial sector.
“If firms are lucky, they will see overall profits growth stay strong in the first half of this year too,” said Mr Bootle. “It will be next year though when profits really take a hit.”